Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information Performance-based remuneration – discretionary deferred shares Purpose and link to strategy Operation Opportunity • In the context of overall • Performance-based remuneration is awarded annually entirely • The maximum number of Group performance, to in the form of nil-cost options over shares which are subject to discretionary deferred shares motivate and reward an vesting (“discretionary deferred shares”). BOGG does not award that may be awarded in respect Executive Director in relation cash bonuses to Executive Directors. of the previous work year is to his or her contribution to • The Remuneration Committee will determine annually the capped at 100% of total salary the achievement of the KPIs number of shares to be awarded based on the Executive Director’s(i.e. cash and deferred share set for him or her by the achievement of his/her KPIs set for the work year and the salary), calculated as set out Remuneration Committee performance of the Group during that year. If appropriate, in the notes to this Policy table. towards the beginning of where a strategic change or change in business circumstances the year. has made one or more of the KPIs an inaccurate gauge of the • Performance-based Executive Director’s performance, the Remuneration Committee remuneration solely in the may decide to base its assessment on alternative measures. form of deferred shares The Remuneration Committee also has the discretion to consider (no cash): the performance of the individual and the Group as a whole. - Closely aligns the interests The outcome of the Executive Director’s performance and the of an Executive Director Remuneration Committee’s determination will be reported in the with shareholders. Directors’ Remuneration Report for the work year in consideration. - Avoids inappropriate risk • Any discretionary deferred shares will normally be granted following taking for short-term gain. the end of the work year, although the Remuneration Committee - Encourages long-term retains the discretion to determine the timing of the awards. commitment to the Group. Any discretionary deferred shares will vest 40% on the third and 60% on the fourth anniversary of the start of the work year (effectively over four years from the beginning of the work year). • Each tranche will be subject to a further holding period of two years. • Upon vesting, the Executive Director also receives cash payments equal to the dividends paid on the underlying shares between the date the award was made and the vesting date. • KPIs for the Executive Director are set near the start of each work year and reflect the Executive Director’s targeted contribution to the Group’s overall key strategic and financial objectives for the work year. KPIs may also include non-tangible factors such as self-development, mentoring and social responsibility. • There is no contractual right to discretionary deferred shares and the Remuneration Committee reserves the right to award no discretionary deferred share remuneration if the Group’s performance is unsatisfactory. • Extended malus and clawback, in addition to lapse provisions (natural malus) apply as set out in the notes to this Policy table. Pension Purpose and link to strategy Operation Opportunity • The Group is required to • Pension provision will be in line with Georgian pension legislation, • In line with current Georgian comply with pension which may change from time to time. legislation, the Executive requirements set by the • The most recent pension legislation that the Bank must Director and the Bank each Georgian Government. comply with has been in eff ect since January 2019. contribute 2% of total • Pension provision is the • There is no provision for the recovery or withholding of remuneration from the Bank, same for all employees in pension payments. and the Georgian Government the Group in Georgia. may contribute a further small amount (0-2% depending on income levels). • Pension contributions will only increase above this level if mandated by Georgian legislation or if mandated by any other applicable legislation. • The same arrangement applies to employees across the Group in Georgia. Annual Report 2018Bank of Georgia Group PLC 133